The Ministry of Statistics and Program Implementation announced on Tuesday that India's Gross Domestic Product (GDP) will grow by 6.4 per cent in FY2024-25 (FY25), a sharp decline from the 8.2 per cent growth recorded in FY24. However, the ministry expects economic activity to pick up in the second half of FY25, driven by improvements in agriculture, industry, and resilient rural demand.
"Real GDP has been estimated to grow by 6.4 per cent in FY 2024-25 as compared to the growth rate of 8.2 per cent in the Provisional Estimate (PE) of GDP for FY 2023-24. Nominal GDP has witnessed a growth rate of 9.7 per cent in FY 2024-25 over the growth rate of 9.6 per cent in FY 2023-24," the Ministry of Statistics and Programme Implementation said in its official release.
Key highlights:
- GDP estimates: Real GDP growth for FY25 is estimated at 6.4 per cent, while nominal GDP growth is estimated at 9.7 per cent.
- Agriculture: Real Gross Value Added (GVA) in agriculture is expected to grow by 3.8 per cent in FY25, a notable growth from 1.4 per cent in FY24.
- Construction and Services: Real GVA in the construction sector is expected to increase by 8.6 per cent, while finance, housing and professional services are set to expand by 7.3 per cent.
- Growth of personal consumption: Private Final Consumption Expenditure (PFCE) increased by 7.3 per cent, reflecting improved consumer confidence and capacity.
Government spending and economic stability
Government Final Consumption Expenditure (GFCE) also rebounded, increasing 4.1 per cent in FY25 compared to 2.5 per cent in FY25. This increase reflected an increase in government spending on goods and services.
Quarterly analysis and inflation
The Reserve Bank of India (RBI) has revised its FY25 GDP growth estimate to 6.6 per cent from 7.2 per cent, citing slower growth in the first half of the financial year. Despite inflation rising by 5.8 per cent in February 2024, above the RBI's target of 4 per cent, the central bank is optimistic about growth driven by rural demand, government investment, and exports.
RBI's quarterly GDP growth estimates:
- Q1 FY25: 6.9%
- Q2 FY25: 7.3%
- Q3 FY25 (estimated): 6.8%
- Q4 FY25 (estimated): 7.2%
The ministry’s announcement comes ahead of the Union Budget 2025-26, slated for release in three weeks, which is expected to focus on fiscal measures to bolster growth in the coming year.
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